In depth
Overview
The Levy will be imposed from 1 January 2025 on short stay rental platforms and will be set at 7.5% of a short-stay accommodation platform's revenue. It is expected that the Levy will not be applied on short-term accommodation facilitated by hotels.
In practice, it is likely the cost of the Levy will be passed on to customers.
Draft legislation imposing the Levy has not yet been publicly released. Key details to be ironed out include:
- Will the Levy be imposed on a platform's Victorian or Australia-wide revenue?
- Will revenue connected to hotel accommodation be excluded from the Levy? Or will hotel platforms be exempt from the Levy?
- Will there be a "levy-free" threshold?
- Will the Levy be imposed in circumstances where the platform operator has no permanent establishment in Australia?
Does the Levy go against the agreement between the Commonwealth and Victorian government?
When the goods and services tax (GST) was introduced in 2000, all states and territories, including Victoria, agreed to abolish and not reintroduce a number of taxes in exchange for the revenue that would arise from the GST being allocated amongst the states and territories. Relevantly, the states and territories agreed to not reintroduce "bed taxes…on the cost of temporary residential accommodation from 1 July 2000." See paragraph 5(vi), Pt 2, Sch 1 of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations (Agreement).
Victoria has not passed legislation giving effect to the Agreement (unlike other states such as NSW). However, it remains unclear how the Victorian government will work around the terms of the Agreement to introduce the Levy.
